The sparkle dims

Lebanon's usually thriving jewellery industry has been struggling in recent months, affected by political instability, regional turmoil and the skyrocketing price of gold
The sparkle dims
Lebanese jewellery exports reached nearly $1.1bn in 2009, according to statistics from the Lebanese Chamber of Commerce
By Mona Alami
Sun 01 May 2011 01:55 PM

The Beirut Central District is home to the country’s foremost jewellery souk. The rich Ottoman style architecture of one of the landmark buildings is befitting of the glitzy jewels that are displayed in the windows. At night, the riveting gems and precious metals come alive, sparkling intensely under the bright lights. But on this Wednesday evening, the souk’s alleys are empty but for a few saleswomen peaking behind the glossy doors of the luxury stores.

“The early months of 2011 have been disastrous for us and this is the first time that we have actually registered a loss,” says jeweler Imad Baadarani, who’s been in the jewellery business for over 20 years.

According to statistics provided by the Lebanese Chamber of Commerce, Lebanese jewellery exports reached nearly $1.1bn in 2009. One of the main destinations of Lebanese jewellery outside the country is Switzerland. Mohamed Chamsedine from research firm Informational International explains that Lebanese exports to Switzerland accounted for $451m in 2006.According to industry insiders, however, export figures could be higher as many Lebanese jewellers fail to disclose the real value of exported items.

To try curtailing the adverse effects resulting from local and regional instability, many jewellers have also established distribution networks in the Gulf. The more elaborate items, like large jewellery sets decked with diamonds or precious stones that are worth hundreds of thousands of dollars, are usually exported. Boghos Kurdian, president of the Lebanese Syndicate of Goldsmiths and Jewellers, estimates exports to the Gulf account for about 50 percent of total gold sales.

“Thankfully, our Saudi activity is still faring relatively well. There was a short slowdown that came with the early unrest, but things have returned to normal. Saudi’s neighbour, Qatar, also represents an important market and sales have been performing well in that part of the world,” says Karim Hakim, owner of the George Hakim jewellery boutique.

In countries where conflicts are ongoing, such as Libya, Yemen and Sudan, there is no longer a market for Lebanese jewellery. “We used to export jewellery lines featuring cubic zirconia to those countries, but sales have come to a halt due to their respective political situations,” says Kurdian.

As well as seeking new markets abroad, Lebanese jewellers also target the flux of Arab tourists who visit the country. “Gulf tourist trends are evolving, and less and less of the former jet-setters who were among our regular clients are still vacationing in Lebanon,” explains Nayla Saab Takieddine, jewellery designer and owner of the Or La Loi boutique.

It is an observation shared by Baadarani, who underlines that in the summer, Gulf tourists account for about 60 percent of his total sales. “In winter, they contribute to about 40 percent. However, last month we only had two Gulf clients, while last year during the same time period we had about 25.”

Lebanese jewellers blame dwindling Gulf tourist spending on the wave of protests and revolutions that have been shaking the Middle East since January. Saab Takieddine points out that her sales have dropped by about 40 percent, while Kurdian acknowledged a 70 percent slowdown this year. The current rocky situation in the Middle East, however, is not the first time that violent turmoil has affected Lebanon’s jewellery sector.

Until the early 20th century, jewellery production in Lebanon was limited to traditional gold pieces, like plain bracelets, necklaces or earrings. It wasn’t until the violence of World War I and the Ottoman Empire’s assault on Armenia that skilled immigrants made their way to Syria and Lebanon. According to Kurdian, Armenians, who were known at the time for their craftsmanship, introduced the art of jewellery making to their new homeland.

The jewellery sector in Lebanon experienced another revolution of sorts during the 1950s, when the Syrian government nationalised all industries, which prompted many Syrian jewellers to relocate to neighbouring Lebanon. However, the 1975 fifteen-year civil conflict battered Lebanon’s renowned jewellery industry, and although there have been periods of détente since its end in 1990, the instability has not ended. A series of political assassinations and uprisings roiled the country between 2005 and 2008, and the Lebanese people are still waiting for the formation of a new government, which has been in limbo for over two months.

“From 2005 to 2008, there was one political upheaval after another, and our sales plummeted to about 30 percent of what we made in the 1990s,” emphasises Baadarani.

As a result, the sector is now largely dependent on outside business.

Inflation has also played a key role in the jewellery market downturn. Rising gold and diamond prices have only gotten higher, making the situation even worse for jewellers.

The cost of gold, for example, has increased from $1,100 to over $1,500 over the past year. “Fortunately, people still perceive precious metals and diamonds as a safe investment,” explains Hakim.

Besides facing a flurry of external challenges, the jewellery sector is not without its own intrinsic problems. Lebanese jewellers face competition from Asian countries and some have even established factories in Thailand and taught artisans the trade. This has led to the production of mass jewellery at cheaper prices.

Like other Lebanese industries, the sector has also been strained by the brain drain caused essentially by the country’s lack of political stability.

“It is very difficult to train and form a proper head artisan, as many have moved to other Arab countries where they have been given better positions at better pay,” highlights Kurdian.

The head of the syndicate stresses the importance of regulating and structuring the Lebanese jewellery sector by creating tighter quality controls in order to preserve its reputation and standards as well as force Lebanese producers to constantly strive for better quality.

“Not every businessman with large capital can turn into a jeweller overnight. This profession requires in-depth knowledge of precious stones and metals as well as proper training. An amateur jeweller who falls victim to a corrupt stone trader can damage the sector’s overall reputation,” warns Kurdian.

Despite the problems, Lebanese still believe that they can weather the storm with their unique skills and innate sense of beauty. “The quality of craftsmanship in Lebanon is unbeatable when it comes to price quality ratio, and local artisans will keep on being sought after for their talent and artistic creations,” underscores Saab Takiedine.

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